CAPITAL expenditure on public transport across Victoria will have to triple over the next decade to cope with the expected growth, according to a new report by the Victorian Auditor-General, Des Pearson.

The audit examined the effectiveness of Victoria's public transport services by assessing whether agencies had delivered effective public transport services and were adequately prepared to improve and then sustain performance in the future.

The report concluded that between 2004 and 2009, the Department of Transport had been insufficiently prepared to effectively manage public transport performance or the rapid growth in patronage.

It also found that satisfaction for all public transport modes deteriorated over the past decade, and that performance has mostly fallen short of government targets in the past five years. The report said the response to this decline was partial and uncoordinated, with an incremental approach to changing timetables where complete revamps were necessary.

However, the report said that from 2008, the Department started to turn this situation around by developing an in-house capability to understand demand and the causes of poor performance and by restructuring the metropolitan train and tram contracts.

Despite the Department's improved performance, the report said future challenges are significant and identified a number of issues:

• Outstanding weaknesses in how the Department measures and reports on performance;
• Objectives in the Act that are not being appropriately measured or managed;
• Partial application of the Department's improved planning approach and the need to advance all plans to the same level of preparedness; and
• A need to better incorporate performance outcomes into planning.

Estimating that capital expenditure will have to triple over the next decade to cope with growth, the report called on the Department to benchmark the costs of operating public transport and devise a long-term plan to improve efficiency.

A number of recommendations were made, including that the Department of Transport:

• Finalise its draft process for setting its State Budget targets, and apply it to contract thresholds and other targets;
• Progress plans to monitor performance against accessibility, sustainability and coordination objectives, and develop rigorous plans to better manage these in the future;
• Address residual gaps in its measurement framework;
• Develop its plans for buses, trams and regional trains to the same level of detail it has applied for metropolitan trains;
• Develop the capability to forecast the performance implications if plan components are delayed or omitted; and
• Benchmark public transport operating costs and devise a long-term plan to improve efficiency.

Public Transport Minister Terry Mulder welcomed the release of the report and said the government endorsed its recommendations.

Mr Mulder said the government was preparing to manage growing demand for public transport by getting more out of the existing network, constructing major new infrastructure and planning for future rail projects.

However he added that some are large projects that "no state can fund on its own" and require federal support.

The Minister also said the establishment of the Public Transport Development Authority, a new, independent body, would further improve the way public transport performance was coordinated, monitored and reported.

The Victorian Auditor-General's report, Public Transport Performance, is available from <http://www.audit.vic.gov.au/>.